There are no special tax exemptions or reliefs for Family Investment Companies (FIC). They are taxed in the same manner as any other company.
Generally speaking, the company will pay corporation tax on its profits and chargeable gains for the period.
This is currently at 19%... it is scheduled to rise to 25% in April. However, it is widely anticipated that the new Gov will scrap this. But who knows!
Any capital gains that are realised by the company are subject to corporation tax at the rate above.
The method of computing gains is broadly similar to that for individuals.
For the most part, any dividends received by a UK FIC, including any foreign dividends, will be exempt from corporation tax.
There are slightly different rules depending on whether the company is small and other wise in deciding whether the tax exemption applies.
FICs are used as part of estate and Inheritance Tax planning. Broadly, any IHT benefits are received by creating shares or interests in shares, and this value is transferred to the next generation. This can be done via outright gifts or providing growth shares to the next generation.
If you would like further assistance in exploring the suitability of an FIC or the taxation of Family Investment Companies, please do not hesitate to get in touch.
Explore more about Family Investment Companies by clicking here.
Family investment companies are becoming an alternative to traditional trusts as a means of wealth and succession planning. Setting up a family investment company may be possible without incurring immediate tax charges.
